European Commission told Air France and Alitalia on July 1 that it has "serious doubts that their cooperation agreement can be approved in its current form" and called on the earners to modify terms of the proposed revenue-sharing joint venture. Both airlines expressed confidence that any EU barriers can be overcome.

The EC concluded that the JV, including a request for exemption from competition rules, would stifle competition on routes between France and Italy. The agreement, which includes plans to integrate hubs in Paris, Milan and Rome and token investments in each other, was part of a commercial accord reached last July when Alitalia joined SkyTeam. The airlines expect that accord to generate annual revenues of up to [euro]600 million ($592. …

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